The Czech Republic is in many ways a Central European success story. Driven by foreign direct investment (FDI) and strong participation in global value chains, the booming Czech manufacturing sector now leads all sectors in terms of employment and gross value added. However, two key challenges threaten this success: an increasingly acute labor shortage and low labor productivity.

The Czech unemployment rate fell to 2.4 percent in 2018, far below the EU average of 8.2 percent, and labor shortages have become an increasing concern for Czech firms. At the same time, the Czech economy is challenged by weak labor productivity and labor productivity growth. Labor productivity per hour worked was $38 in 2017, only 86 percent of German productivity levels. Firm-level data shows that Czech small and medium-sized enterprises (SMEs), in particular, drag down the country’s labor productivity, with small firms experiencing about half the labor productivity of larger Czech firms.

Czechia, like its Central European neighbors, is now at risk of experiencing a variation of the middle-income trap, where the past manufacturing-based success is no guarantee of a future one. The term “middle-income trap,” coined by Indermit Gill and Homi Kharas in 2007, describes the situation where a country can no longer compete internationally in labor-intensive industries because wages have increased, but it can also not compete in higher value-added activities because productivity is too low. Does this sound familiar?

This double challenge could potentially be overcome by the anticipated wave of digitization and automation technologies, known as Industry 4.0, which, if properly integrated, could boost productivity while also substituting out labor. Developing and adopting advanced manufacturing technologies is not simple: New operational technologies, like advanced robots and autonomous production, require sizeable upfront investments and a specialized workforce to develop and operate them. Despite its successful manufacturing sector, Czechia lacks the market, workforce, and economies of scale of its neighbors, Germany and Austria. The question is whether Czechia and similar economies are prepared for this new digital wave.

As part of the ongoing World Bank Industry 4.0 Flagship Report, we conducted a case study of Czech disruptors who potentially hold the key for upgrading the Czech manufacturing sector by developing new digital solutions. We identified around 50 startups developing innovative Industry 4.0 technologies and asked them about the most pressing challenges facing their companies. One such startup is Sewio, a Brno-based startup that developed a real-time indoor location tracking system that helps its clients track objects in locations where GPS doesn’t work. Sewio now has customers in 37 countries including Volkswagen, Budweiser Budvar, Pirelli, and Škoda.

The journey of Industry 4.0 startups: What did we learn?

It’s hard to manufacture an Industry 4.0 startup. These entrepreneurs face several challenges beyond those faced by a “typical” ICT-based startup. Because of the sometimes disruptive nature of these technologies, high upfront investment costs and entrenched market power of trusted global Industry 4.0 solution providers, the barriers of market entry are considerably higher. Notably, for potential adopters, the risk is higher given that the margin for error in manufacturing products is smaller than other industries; any disruptions can result in production downtime and lost revenues.

Getting early customers often requires a plant manager or executive willing to “take a chance” on a new company and product where others will not. Many Czech startups found their first customer in Czechia, where they tested and validated their solutions. These first customers are often critical to the development and survival of Industry 4.0 startups. They provide access to data needed to develop their digital solutions, train algorithms, model systems, and/or calibrate equipment. They also provide testbeds and demonstration sites for the startups to pilot and validate their technologies in real-world environments.

Even after startups have validated their products with one or more early adopters, additional customers often feel pilots are necessary to demonstrate the solution’s benefits, and, more critically, ensure that the solution will not disrupt important company processes and operations. Pilots include an assessment period, after which the adopting company may spend some time deliberating whether to adopt at a wider scale. This pilot-assessment-deliberation process can extend procurement timelines by years and severely restrict the cash flows of Industry 4.0 startups.

One way around this pilot process is to partner with incumbent solutions providers, who can provide startups with access to a broad customer network under a trusted brand name. Sewio, for example, worked with Cisco and PwC, who were both looking for new products to expand their “internet of things” capabilities. These partnerships often lead to acquisitions of startups by the established providers. In fact, there have been two such acquisitions in Czechia in the last two years: Cleerio, which develops mapping and asset management tools, was acquired by BioNexus in 2017, and Stories, developer of a business intelligence AI assistant, was acquired by Workday in 2018.

What can be done about it?

Czech and European policymakers can help alleviate some of the stresses facing Industry 4.0 startups and remove some of the informational barriers facing entrepreneurs, investors, and adopters—especially SMEs. Most importantly, increasing the supply of digital skills will be critical to the country’s capacity to develop and absorb Industry 4.0 technologies, and thus, digital skill development should be central for national level-policies and strategies. Innovation agencies and industry associations can also promote successful business cases of Industry 4.0 adoption among SMEs, showcasing how specific technologies could generate productivity and competitiveness impacts. Czech authorities can also design competitions that incentivize data-generation and create a marketplace for data sharing related to manufacturing and industry processes; the CoFIT program by the Technical University in Prague is an example of such platforms. Finally, concentrated efforts to increase national investments in Industry 4.0-related research will be needed, leveraging European initiatives and resources such as AI4EU, as well as removing the persistent barriers to research collaboration and technology transfer.

FoxFury Lighting Solutions is a 16-year old family-owned company headquartered in the coastal, northern outskirts of San Diego. Founded to solve a particularly Californian problem — developing a specialized light to allow night surfing on crowded beaches — its mission has evolved to tackle larger global challenges. Today, FoxFury exports cutting-edge “Xtremium” headlamp products to China, Japan, and other countries around the world, helping fire and rescue officials respond to major global humanitarian disasters from earthquakes in Fukushima and Italy to hurricanes in Puerto Rico and Texas.

FoxFury’s shift from a domestically-focused company to a global exporter is an evolution that is still relatively uncommon among U.S. firms. Closing this gap has been an increasing focus for local economic development leaders in cities around the country, including in San Diego, where FoxFury accelerated its exporting activity through a grant competition and support program administered by the World Trade Center San Diego, an affiliate of San Diego Regional Economic Development Corporation (EDC).

Many of these efforts stem from the Global Cities Initiative, which made the case in the aftermath of the Great Recession that exports mattered because of the opportunity to diversify markets, strengthen firms and regional economies, and grow well-paying jobs. Local leaders, in turn, responded: economic development organizations across dozens of cities participating in GCI created new strategies to grow exports, mainstreaming global engagement into economic development in unprecedented ways. In metro areas ranging from Atlanta to Chicago, Indianapolis, Kansas City, Mo.- Kan., Phoenix, Salt Lake, San Antonio, St. Louis, and Wichita, Kan., this included developing grant programs to raise the profile and expand awareness of exporting. It also meant launching new export assistance resources and programs, centralizing, strengthening, and building on an existing ecosystem of trainings, guidance, and support long provided by the U.S. Commercial Service and a disparate array of other institutions.

But in the nearly decade since this work started, the narrative has become more complicated. Tariffs and trade wars have inserted instability into global markets. A stronger U.S. economy means greater domestic growth potential. And though exporting has real and substantial benefits for firms and regions, not every firm is ready to “go global.” The smartest local programs have evolved to reflect these realities, carefully building pipelines of suitable firms and offering tailored services and guidance, equipping companies to navigate these headwinds and grow and strengthen through global engagement.

Expanding the pipeline

San Diego’s MetroConnect program culminates each year with a flashy pitch competition, where firm participants try to outdo each other for $35,000 in prize money to support participation in trade shows, trainings, translation services, and other investments to help them expand globally.

But the real work starts months earlier.

Over the course of a year, roughly 15 companies selected via a competitive process receive $10,000 from the EDC, along with access to a slate of workshops and resources spanning topics like navigating intellectual property regulations and utilizing the Ex-Im Bank. A WTC San Diego project manager trained in exports assistance and compliance is on-call to help firms troubleshoot more specific problems. Companies also receive temporary membership in the EDC itself, connecting them to other local firms and regional initiatives.

Over four years, San Diego’s MetroConnect program evolved from a grant program seeking to raise the profile of exporting among area firms to a more sophisticated initiative combining funds with other support and targeting specific industries tied to the EDC’s broader economic development strategy.

For FoxFury, one of four finalists for the grand prize last year, these resources helped the company make crucial connections to dealers in Japan and Germany, establishing the firm as a potential partner in a business where leads and trust can often take years to build.

“We are a product development house. A lot of new products come out constantly. Making people aware of their existence is a problem, is a hurdle,” explained Mario Cugini, FoxFury’s CEO. “This process allowed us to get to the right person, get the right level of urgency, and the right level of support, and it’s been very, very valuable.”

Making strategic choices

In Louisville, Ky., where leaders developed one of the first city/regional level export grant programs, applicants were carefully screened to determine their readiness to export. Grant funding of $4,500 was also complemented with a package of other exports assistance, such as counseling, education about relevant export services, and introductions to other local service providers.

This evolution reflects the fact that it takes more than a passing interest in exports to succeed in complex global markets. International customs fines can quickly rack up, logistical issues are harder to troubleshoot, it can be easy to enter unfavorable terms with a foreign distributor, and a misstep in securing insurance on a shipment can turn into a loss in the hundreds of thousands of dollars.

“Some firms have good reasons for not exporting. As economic developers, it’s important that we do everything we can to discern which firms have the capacity and the will to develop as exporters.” said Jeanine Duncliffe, the director of international economic development at Louisville Metro Government, “Our job is to try to steward our limited resources toward the companies for which exporting represents, on balance, a positive and sustainable opportunity for growth. The grant’s competitive selection process helped us to accomplish that goal, particularly when firms were more risk-averse in the years following the recession.”

To identify applicants best positioned to succeed, Duncliffe developed a scorecard assessing criteria including past export performance, evidence of proactive interest in expanding to new markets, and signs that the firm’s product or service would be competitive in the global marketplace. Grant money was also split to support a larger track of existing exporters with some demonstrated success in global markets, while expanding the regional pipeline by taking chances on a smaller number of promising new exporters.

Building a broader ecosystem

Building internal capacity and developing a broader ecosystem to support exporting was also a lesson for Syracuse, N.Y., which centralized exports assistance for firms, enabling leaders to connect over a hundred companies a year to a carefully-cultivated “resource mountain,” including lawyers, insurance experts, regulatory authorities, and fellow exporters.

Recognizing that many firms didn’t have the same sophisticated capacity to navigate global markets as international trading partners, Syracuse also launched a program deploying exports consultants into firms to work hand-in-hand finding buyers, developing pricing strategies, designing compliance structurers, and building long-term knowledge to succeed at exporting.

Other resources and guidance from Syracuse’s Central New York International Business Alliance have helped firms troubleshoot legal and compliance issues, better understand foreign distribution channels, and identify the right global business partners. More broadly, according to Steven King, the executive director of the International Business Alliance, developing proactive –rather than reactive—approaches to trade has helped firms avoid potentially costly deals that were more a “kneejerk reaction to someone who has a checkbook,” than a good business opportunity for the company.

“What we give them is comfort that if they remain in contact with us and we come and meet with them and get updates from time to time, we’re there to hold their hand and save them from jumping off the edge and doing the wrong thing,” said King, “Now these companies know us, they know they can pick up the phone and say ‘I’m not sure about this, what do you think?’”

Reinforcing the case for “going global”

Being prepared to enter global markets helps firms realize the very real benefits of doing so, even as tariffs and trade wars, Brexit, and the strength of the U.S. economy shift the calculus of global business.

Outside Milwaukee, Bruno Independent Living Aids has exported to Europe for over fifteen years and even acquired British and French subsidiaries, thanks in part to a market supported by European governments’ willingness to fund the lifts and a preference for keeping older and disabled individuals at home.

For Bruno, which received a $5,000 export promotion grant from Milwaukee’s regional economic development organization Milwaukee 7, selling in Europe is fundamental to the growth and innovation of its business, even as it makes up less than 5% of total business.

“The European stair lift market is so robust and an opportunity, even if we’re able to go over there and get 5 or 10% of the market share, that would be a huge win for us,” said Bill Page, Bruno’s director of product management, “It keeps us competing against our main competitors on their home turf and understanding what’s happening in the European market. And anything that happens in the European market eventually comes over to North America, so there’s the whole strategic side of us protecting our North American business as well.”

Access to global expertise is also a fundamental benefit to exporting for San Diego’s FoxFury.

“In the work that we do, you can’t be insular,” said Mario Cugini, the company’s CEO. “Firefighters do things very different in Japan than Germany, Slovenia, Chile, Canada, or other locations. And so for us it’s critical to also learn how they’re doing things so the products that we come up with can be used by the largest possible number of firefighters, policemen, or SWAT teams.”

This combination of growth opportunities, learning, hedging risk by diversifying markets, increased revenue, and other benefits that can contribute to firm competitiveness provide powerful incentives for the right firms to enter global markets, despite the costs, periodic ups and downs, and the immediate headwinds of the current trade landscape.

“It’s a very myopic view to think that, ‘Gee, the U.S. economy is doing well, so therefore, there’s not much value to exporting,’” said Cugini, “That is just today. Tomorrow, everything will change. The day after that, it will change again.”

Disclaimer: As part of the Global Cities Initiative, JPMorgan Chase has supported implementation of exports grant programs and other exports assistance services across many cities, including those featured in this post. Brookings was not involved in any aspect of conceiving, developing, reviewing, or approving a grant application.

]]>How a rural Virginian town is using entrepreneurship to boost its local economyhttps://www.brookings.edu/blog/the-avenue/2019/08/01/how-a-rural-virginian-town-is-using-entrepreneurship-to-boost-its-local-economy/
Thu, 01 Aug 2019 18:38:52 +0000https://www.brookings.edu/?p=603556By Jenna Temkin

So where does this leave small rural towns looking to revitalize their communities in the face of widening geographic divides? And what role can transformative placemaking play in reinvigorating their local economy?

A look at Wytheville, Va.—a small town of 8,000 situated in the foothills of the Blue Ridge Mountains—provides some insight.

Spurring economic revitalization through rural entrepreneurship

In the 1950s, Wytheville’s downtown was booming. Businesses lined the Main Street, and a vibrant soda shop served as its anchor. But about fifty years later, the soda shop was gone, and the struggling downtown faced challenges that are familiar to many small towns across southwest Virginia coal country. As industry declined, so did the town’s jobs and population, causing businesses to close and vacancies to increase, leaving few anchors or amenities to draw people to Main Street.

The town decided to start with what it had locally: aspiring entrepreneurs looking to launch their own businesses.

To address these challenges, Wytheville adopted a person- and place-based approach to leverage local assets, build regional partnerships, encourage community capacity-building, and ultimately revitalize its regional economy. Three years ago, the town’s place governance organization, Downtown Wytheville, Inc., made it its mission to bring economic vitality back to Main Street. It completed a major downtown streetscape renovation, improving sidewalks, lighting, and crosswalks on Main Street, to create a more vibrant downtown. But leaders realized that Wytheville required more than physical changes to its landscape to spur revitalization: it needed human capital and the necessary skills to drive small business development and growth.

The town decided to start with what it had locally: aspiring entrepreneurs looking to launch their own businesses.

Investing in people is critical for community revitalization

While Wytheville recognized entrepreneurship as a critical tool for economic development, particularly for rural communities, leaders also knew that a lack of human capital and resources meant they would need more than small loans and financial incentives to create a supportive entrepreneurial environment. In addition to capital, residents need access to the skills training, mentorship, and resources required to create a locally-led and sustainable entrepreneurial environment.

And the first step in making this happen? A small business competition designed to build community capacity, make long-term investments in residents, and create a self-sustaining entrepreneurial ecosystem.

In 2018, Downtown Wytheville applied for and received a Community Business Launch Grant from the Virginia Department of Housing and Community Development and launched the competition, Evolution Wytheville. After receiving funding, Downtown Wytheville partnered with the Joint Industrial Development Authority of Wythe County and the Wytheville-Wythe-Bland Chamber of Commerce to recruit local businesses and build partnerships with downtown property owners—some of whom agreed to offer incentives, like reduced rent, to have competition winners locate in their storefronts.

The competition was open to anyone looking to start a business in the downtown district, and leaders conducted a local and regional awareness campaign to attract new and expanding businesses. After advertising with local media outlets and sharing a promotional video on social media, 30 aspiring entrepreneurs signed up. Town leaders narrowed it down to eight finalists and matched them with mentors, required them to take six entrepreneurship courses (ranging from financials and cash flow to business and legal structure), and asked them to present detailed business plans to a panel of local business leaders. Judges evaluated plans on the amount of foot traffic the business would generate, the number of jobs it would create, and the quality of the overall plan.

Four winners eventually took home $75,000 in prize money—two winners each opened breweries, one a Vietnamese bakery, and the other an art school. Participants highlighted the importance of not just the grant, but also the skill-building efforts. As the art school owner said: “The money we received and the publicity we got from winning were huge, but even before we won, we quickly saw our business grow based on what we learned,” she said. Now, classes are filling up so quickly that she’s planning to hire additional instructors.

By combining skills-building with mentorship and networking opportunities, places are using this model to lay the foundation for a strong and inclusive entrepreneurship environment, where nontraditional entrepreneurs can access the tools they need to launch their businesses.

This kind of capacity-building is a critical component of revitalization efforts across the country—including programs like Grow North in Minnesota, which provides online resources, in-person education, and opportunities to connect with other entrepreneurs, and TrepConnect in Albuquerque, N.M., an app that matches entrepreneurs to local resources and services. By combining skills-building with mentorship and networking opportunities, places are using this model to lay the foundation for a strong and inclusive entrepreneurship environment, where nontraditional entrepreneurs can access the tools they need to launch their businesses.

Small-scale, place-based strategies can bring lasting impact

Today, thanks to walkable streets, new retail shops, restaurants, and breweries, a rural Main Street previously suffering from decline, population loss, and a lack of amenities, is now seeing new business growth and investment. This momentum is reflected in public and private reinvestment data: In 2018, the Downtown Wytheville district received $800,000 in public reinvestment and $5.7 million in private investment. To continue to reap these benefits, Wytheville is investing in additional efforts to nurture and sustain its entrepreneurial culture, offering free business classes and marketing assistance to residents and incentives like meal tax incentives, façade improvements, and signage programs to small businesses.

Ultimately, Wytheville’s effort to boost entrepreneurship is not just about the winners of the business competition or other downtown Wytheville business owners—it is about improving the quality of life and access to quality places for an entire community. While such efforts cannot erase the geographic and demographic challenges Wytheville and other small rural towns like it face, they are helping to drive small-scale, regionally inclusive economic growth and showing the importance of centering people and place when doing so.

Note: Downtown Wytheville, Inc. is a part of Main Street America, a national network of more than 1,600 neighborhoods and communities who share a commitment to creating high-quality places and to building stronger communities through preservation-based economic development.

Dr. Jackson Nickerson is a nonresident senior fellow in Governance Studies at Brookings. Nickerson is also the Frahm Family Professor of Organization and Strategy at Olin Business School, Washington University in St. Louis. Nickerson was the associate dean and director of Brookings Executive Education from 2009 to 2017 and is an expert in leadership development in government as well as business strategy, strategic planning processes, and strategy execution.

He is the author of Leading Change from the Middle, Tackling Wicked Government Problems, and Leading Change in a Web 2.1 World, all of which are published by Brookings Press. He also authored Leading in Government: Practical advice to leadership questions from the front lines (Brookings Executive Education). A frequent collaborator with the Center for Homeland Defense and Security, he helps public, private, and nonprofit leaders advance their critical and diagnosis capabilities to increase the likelihood of solving the right problem the first time. He holds a Ph.D. in Business and Public Policy, an M.B.A., and a Master of M.S. Engineering, all from U.C. Berkeley, and a B.S. in Engineering from Worcester Polytechnic Institute. He also was an engineer with NASA’s Jet Propulsion Laboratory.

Those working to accelerate economic growth in the Heartland must face some stark realities. The Great Lakes region continues to export wealth to coastal economies, even as investment leaders try to equalize growth between the coasts and the Heartland. The region sees only a tiny fraction of venture capital (VC) deals, despite producing one quarter to one third of the nation’s research and development, new patents, and top talent. Great Lakes VC funds are currently seen as too small or too unknown for investors—at a time when VC is funding fewer firms with bigger exits.

Given all of that, here’s an approach policymakers and investors could try to stem the export of capital from the region: A regional venture capital fund-of-funds. A recent analysis sponsored by the Brookings Institution and the Chicago Council of Global Affairs, and conducted by a team of University of Michigan Executive MBA candidates, suggested such a remedy.

A regional fund-of-funds would be a vehicle for in-region and out-of-region investors who put their dollars to work with investments in venture capital firms. The regional fund would allocate investors’ money into a network of well-run state and local/regional VC funds, and co-invest with them in promising companies. Such a fund would facilitate much-needed growth in the size and scale of the venture capital network in the Great Lakes/Midwest—allowing it to be competitive in today’s larger and later rounds of funding. This, in turn, would help transform more of the region’s prodigious innovation into new businesses and jobs locally—realizing good returns for investors and fueling economic transformation of the “Rust Belt” economy.

Such a program is not new. In fact, Frank Samuel, the architect of Ohio’s “Third Frontier” state investment fund, first proposed a “Great Lakes” regional venture capital fund in a 2010 Brookings paper.

The important role of venture capital

Many see the venture capital game as a flawed process that leaves entrepreneurs hostage to the ever-growing big dollar whims of a handful of (largely white and male) coastal multi-millionaires or foreigner investors. While VC isn’t perfect, and it certainly has its share of representation problems, it has also been an essential generator of both innovation and economic opportunity for the United States. For example, in recent decades VC has generated more economic and employment growth in the U.S. than any other investment sector. Annually, venture investment makes up only 0.2% of GDP, but delivers an astonishing 21% of U.S. GDP in the form of VC-backed business revenues.1

Most venture investments, like any other form of early-stage financing, fail. However, when venture-backed deals do pan out, they create an explosive growth dynamic, seeding the creation of additional local startups. These follow-on effects can foster a robust innovation ecosystem that helps sustain growth. Perhaps most importantly for transforming (and rebranding) the “Rust-Belt,” VC-backed companies are on the cutting edge of emerging sectors and technologies, rather than industrial or “old economy.” It’s venture-backed firms like Tesla, Beyond Meat, and Square that create the new businesses that help “superstar” cities like San Francisco, Boston, and New York to pull away from others, and enable secondary cities, like Austin, Seattle, and Boulder, Colo. to emerge as vibrant tech-hubs. As long as the venture capital game is being played, the Midwest needs to get its share.

Changes in venture capital make it hard to “find” Midwest innovation

As detailed in prior posts, the states that make up the industrial Midwest have innovation horsepower, punching at or above their weight on key metrics that drive new business formation. Home to a third of U.S. Fortune 500 companies, and 20 of the world’s top research universities (more than any other region), the Midwest generates:

26% of the nation’s corporate and university patents

31% of U.S. university-based research and development, including 34% of highly competitive National Institutes of Health (NIH) research funding, the key to creating new drugs and medical technologies

35% of the nation’s total bachelor’s degree holders

33% of its STEM graduates,

32% of all higher education degrees awarded in the United States

Normally, innovation metrics of this scale translate into significant new entrepreneurial activity, start-ups, and jobs.

New research confirms the case that the nation’s venture capital—including VC fueled by the Midwest’s large-scale university endowments, philanthropies, and state and local pension funds—is not finding the region’s innovations or helping turn them into new jobs and businesses. If anything, the dynamics of the venture-investing world, demanding ever-bigger investments and rewarding fewer and fewer big winners, are making growth prospects worse for the Midwest.

Dollar values for investments in different regions reveal great disparity that goes far beyond just total deal numbers. The six central Great Lakes Region (GLR) states had a similar total number of deals as Boston; however, the dollar values of the deals in Boston were 2.3 times larger than in the Great Lakes. Likewise, California had approximately five-times as many deals than the GLR in 2017, but their dollar amount was more than 12 times larger than GLR investments. This trend of larger deal sizes demonstrates a crucial feature of VC activity: higher deal values (and consequently larger company exits) are achieved on the coasts, and the gap between the coasts and the GLR is growing.

As Figure 2 indicates, Midwest venture funds are relatively few in number, smaller, and more dispersed across a broader geography than those in the large deal-making “hothouses.”

This further disadvantages the Midwest at a time when the venture capital industry is demanding larger funding rounds. Data from the National Venture Capital Association (NVCA) showed a steady increase in total number of VC deals from 2004 to 2015 (a five-fold increase), followed by a modest decline over the last two-to-three years. Despite the fewer number of VC deals in recent years though, total capital contributed climbed to an all-time high in 2017.

Midwestern venture investors who have good investment track records surveyed as part of the research clearly see the need for more capital to apply towards promising innovations. States like Illinois and Indiana are doing what they can to grow their capital base and homegrown startups through state-based investment funds. However, these efforts are sometimes circumscribed in their impact, as changing political leadership alters or ends programs, and geographic constraints don’t support return-driven ecosystem growth.

Nonetheless, the Midwest’s smaller funds can’t compete in a VC environment where there are fewer successful exits, more capital is required, and a growing risk-return ratio. For example, three recent billion dollar-plus exits in the region, Clever Safe, DUO, and Exact Target, had no meaningful capital from the Great Lakes.

Meanwhile Midwestern wealth subsidizes coastal investing

Ironically, the region generates a lot of wealth that is invested in venture capital. The Midwest is home to seven of the nation’s 25 richest universities in terms of endowments, and some of the largest foundations in the country. The region is also home to many public and private pension funds, with substantial resources under management. But as Table 1 indicates, given the small size and relatively modest number of venture capital firms at work in the region, its incredible wealth doesn’t often get put to work to grow new jobs and businesses. A sampling of some of the region’s large institutional investors showed they had collectively invested in 71 VC funds since 2008—but only one of the funds was managed in the region.

The Midwest needs effective solutions to counter this export of capital from the region, and create a new economic narrative and reality. One remedy could be to create a regional fund-of-funds.

A practical first step: A Great Lakes regional fund-of-funds

Researchers on this project, joined by a number of regional and national leading venture investors, have been scoping the most practical and effective plan to develop such a fund. Ideally, the fund would be private sector-led, and organized by experienced fund managers and investors who appreciate that the main goal is to help investors realize good returns alongside a complementary social impact mission, with a focus on the GLR. Additionally, there should be low or zero geographic constraints on where the fund can invest, and who can invest in the fund, as such constraints have tended to crimp similar fund-of-fund’s investment success and economic impact for the region. The fund should be a partnership of the region’s leading venture organizations and investors, as well as investors from Silicon Valley and others outside the region. Finally, it should offer a vehicle for finding good returns to investors that also grows the capital under management among the network of Great Lakes regional VC funds.

Starting with a $150 to $200 million fund pitched as a vehicle for institutional investors to make solid but relatively small bets ($5 to $10 million), among a network of emerging yet effective managers with experience in the region, would substantially decrease the risk in these investments. A particular focus could be in soliciting small initial investments from the region’s philanthropies, state pension funds, and university endowments. These institutions have significant assets under management, a history of venture capital investing, and are returns-focused—but they also share in the funds’ social mission and the ancillary benefits of enhancing the region’s innovation ecosystem, accelerating economic growth locally, and enhancing technology transfer and revenues from universities.

To that end, a regional fund-of-funds could be a key strategy for catalyzing new job and business growth in the upper Midwest, helping more workers find a place in a changing economy, and modernizing the narrative of a region that is truly one of the world’s leading innovation engines.

Greg Bjork, Vik Panchal, Amanda Richie, John Stephens, Darryl Won, and Jack Farrell of the University of Michigan contributed to this post.

Last month, Sen. Marco Rubio convened a reauthorization hearing for the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, which he described as “programs that provide needed investment in America’s most innovative small businesses.”

Indeed, these rarely discussed programs are a critical component of the nation’s effort to reignite lagging business dynamism. SBIR/SSTR grants are designed to stimulate the commercialization of technological innovation via small businesses, or companies with fewer than 500 employees.

Research shows SBIR/STTR grants play a critical role in translating research and development (R&D) into commercially successful companies that would not happen otherwise. As Joseph Shepard and John Williams, the current Small Business Administration (SBA) Associate Administrator and the SBA Director of Innovation and Technology, respectively, stated in their testimony, “The SBIR/STTR program provides approximately $3.5 billion per year in funding to small businesses, making it the largest single source of non-dilutive, early-stage, high-risk funding.”

Raising seed funding from traditional venture capital investors has gotten more difficult in recent years, especially for startups outside traditional tech hubs and those with female or minority founders. By contrast, SBIR/STTR funding is subject to a clear mandate in the Small Business Act to support the participation of women, socially/economically disadvantaged individuals, and small businesses in underrepresented areas, typically rural states.

SBIR/STTR grants could, in theory, provide critical initial investment for many communities outside the large investment hubs and/or disadvantaged high-tech entrepreneurs who struggle to access private capital. But is America’s Seed Fund meeting these goals, in practice? To answer this question, we explored the distribution of grant awards from 2005 to 2017 using the SBIR/STTR award database.

The SBIR/STTR program invests in more diverse communities than private venture capital.

SBIR/STTR funds reach a much wider set of U.S. communities than traditional venture capital. Table 1 shows that the largest 100 metropolitan areas captured 78% of total SBIR/STTR funding, and smaller metropolitan areas received another 19%. Micropolitan and rural areas received a little over 3% of all SBIR/STTR funds. As a comparison, more than 80% of private venture capital investment in 2017 landed in five metropolitan areas (San Francisco, New York, Boston, San Jose, and Los Angeles).

Of course, larger metro areas have more people and companies to attract investment. Controlling for the size of regional economies, smaller metro areas punch above their weight. On average, smaller metro areas, those with populations between 50,000 and 500,000 people, receive 16% more funding per 1,000 workers than the largest 100 metro areas. This result is largely driven by college towns or military bases such as Boulder, Colo., Ithaca, N.Y., State College, Pa., Blacksburg, Va., and Huntsville, Ala.

Female and minority-owned business owners remain underrepresented in SBIR/SSTR awards.

The SBIR/STTR program’s record supporting diverse founders remains subpar. The federal government tracks if an awarded business is owned by a woman or a person from a socially disadvantaged group.[1] The percentage of SBIR/STTR grants awarded to female business owners rose slightly between 2005 and 2017, from 8% to 11%, but the share awarded to socially or economically disadvantaged business owners remained essentially flat at 8%. These shares are considerably lower than female and minority shares of population and business owners generally (Figure 1). Private venture capital investors, on the other hand, have actually increased their investment in female-founded startups from 7% to 21% during the same period, although investment in black startups remains at 1%.

These patterns vary across metro areas, however. Female-owned companies received the highest share of SBIR/STTR grants (more than 20% from 2005 to 2017) in Colorado Springs, Colo., Gainesville, Fla., Providence, R.I., Orlando, Fla., and Boulder, Colo. In contrast, female-owned companies received less than 5% of grants in Houston, Madison, Wis., Dayton, Ohio, Seattle, and Worcester, Mass.

Lincoln, Neb., Oxnard, Calif., Burlington, Vt., Phoenix, Ariz., and Chattanooga, Tenn. are among the handful of places where the share of socially or economically disadvantaged SBIR/STTR awardees surpassed the region’s minority population share (Map 1). In Winston-Salem, N.C., Greenville-Anderson, S.C., Ogden-Clearfield, Utah, Rochester, N.Y., Detroit, and Portland, Ore., the minority share of SBIR/STTR awardees is less than one-tenth their share of total population.

Innovation-based economic development approaches must intentionally address the racial and gender inequities that are calcified into the innovation economy.

Further research will need to explore the source of demographic variation in SBIR/SSTR grant awards across communities. But it is clear that the way in which American entrepreneurs access public and private capital is powerfully shaped by who they are and where they live. Affirming this finding, recent research, led by Alex Bell and Raj Chetty, reveals that the U.S. economy draws on a relatively narrow slice of its population to fuel new innovations. Bell and Chetty argue that including more talented young people from a more diverse range of communities, genders and ethnicities in the innovation economy is not only socially just, but has great potential to expand the nation’s overall rate of innovation.

The SBIR/SSTR program is not the only tool available to boost innovation by closing disparities in access to seed capital. In 2010, the SBA launched the Federal and State Technology (FAST) Partnership Program. This on-ramp program offers one-year funding to local economic development organizations, incubators, universities and small business centers to support services for structurally disadvantaged business owners that help connect them to SBIR/STTR programs. But it only provides about $3 million in support per year.

Local and state leaders clearly have a role to play as well, both related to the SBIR/SSTR program and beyond. Launch Tennessee, a state SBIR/STTR grant matching apparatus, offers a higher matching rate for companies located in Opportunity Zones, and those owned by women, minorities, veterans and people with disabilities. Further upstream, countless local innovators are working to build more inclusive entrepreneurship networks in America’s cities. One of the most ambitious is Opportunity Hub, led by founder and Brookings nonresident senior fellow Rodney Sampson. Through a series of partnerships with incubators, coding schools, municipalities and tech companies, Opportunity Hub has built a network that engages 15,000 individuals in an effort to build multi-generational wealth in black communities through high-growth entrepreneurship.

[1] We exclude from the analysis the 5.8% of companies that did not report demographics of the owner, which amounts to 5.2% of total funding. A woman-owned small business is defined as one that is at least 51% owned and controlled by one more or women. A socially and economically disadvantaged small business is one that is 51% or more owned by a one or more disadvantaged persons, which is defined as a member of any of the following groups: black Americans, Hispanic Americans, Native Americans, Asian-Pacific Americans, Subcontinent Asian Americans, other groups designated from time to time by the Small Business Administration (SBA) to be socially disadvantaged, and any other individual found to be socially and economically disadvantaged by SBA pursuant to Section 8(a) of the Small Business Act, 15 U.S.C. ; 637(a). For more information on this definition, contact the SBA.

]]>Self-employment can be good for your healthhttps://www.brookings.edu/blog/up-front/2019/05/29/self-employment-can-be-good-for-your-health/
Wed, 29 May 2019 16:57:27 +0000https://www.brookings.edu/?p=586132By Milena Nikolova

Despite long working hours and high work pressure, entrepreneurs and the self-employed frequently boast high job satisfaction because of the autonomy and the interesting work that often come with being one’s own boss. Yet, we know much less about how self-employment affects entrepreneurs’ physical and mental health. This is unfortunate because it severely limits our understanding of the nonmonetary benefits and costs of entrepreneurship, as well as its challenges and promises.

Entrepreneurs’ contributions to job creation, innovation, and creativity are key to social progress and economic growth. By contributing to individual and collective empowerment and well-being, entrepreneurship can help promote social cohesion, resilience, sustainability, and inclusion. Therefore, understanding the causes and consequences of entrepreneurship is key to designing innovative strategies to achieve social progress. Most importantly, if entrepreneurship is conducive to health, policy instruments that encourage entrepreneurship such as start-up grants can also indirectly improve health outcomes in society.

In a recent paper published in the Journal of Business Venturing, I offer the first causal evidence on the health consequences of switching to self-employment. Using German survey data tracking individuals and their careers over time, I find that becoming one’s own boss improves the mental health of those who were initially unemployed and of individuals who were formerly full-time employees. In Germany, self-employment is about 10 percent of total employment and about 5 percent of the population is the owner/manager of a new business or in the process of starting one.

I show that “opportunity entrepreneurs”—workers who switched from 9-to-5 jobs to self-employment—also improved their physical health. However, “necessity entrepreneurs”—individuals who switched from unemployment to self-employment—did not see a change in physical health as a result of becoming their own boss (Figure 1). Mental health gains, meanwhile, are bigger for those escaping unemployment than for those switching from regular jobs. This is not just because they avoid the stigma of being unemployed but also likely because they get an identity boost from being self-employed.

To better understand whether these mental health improvements are due to self-employment or working per se, I also studied transitions from unemployment to regular employment. Indeed, switches to self-employment lead to higher increases in mental health compared to moving to a job in the private sector. Given the large psychological costs of unemployment, it is reassuring to know that self-employment provides not only a livelihood but also psychological health gains to those who escape the misery of joblessness.

My findings are based on comparing the before-and-after health outcomes of people who switch to self-employment (treated group) with those of individuals who remain in the original labor market state (either unemployment or regular employment). Before undertaking the before-and-after comparisons, I use statistical matching to ensure that the groups of those who switch into self-employment and those who remain in the original labor market state are as similar as possible regarding characteristics such as age, gender, education, family circumstances, and even pre-treatment health outcomes. The rich longitudinal information in my dataset allows me to conclude that my findings are not due to personality and risk preferences or changes in income and working conditions. I also rule out that the results are due to relatively healthy individuals starting a business and that the health benefits of self-employment are indeed due to self-employment and not to the excitement about the new job.

Figure 1: Mental and physical health changes due to switching to entrepreneurship

Source: Nikolova (2019) based on estimations from the German Socio-Economic Panel (SOEP), 2002-2014.

Notes: This figure illustrates the estimated changes in individual self-reported physical and mental health following the switch from unemployment to self-employment (left panel) and regular employment to self-employment (right panel) based on difference-in-differences estimations (with 95% confidence intervals). The Mental Component Scale and the Physical Component Scale are based on the SF-12 questionnaire, which is a valid and reliable survey instrument for eliciting health information. The Mental Component Scale is a weighted combination of variables measuring mental and emotional health, social functioning, and vitality. The physical component scale is a weighted combination of variables capturing bodily pain, physical functioning, and the presence of physical health problems. Both scales range from 0 to 100 and are standardized to have a mean of 50 and a standard deviation of 10. Higher values correspond to better physical/mental health.

These findings support the “active jobs” hypothesis, which suggests that the combination of high job demands (work intensity, time stress, high workloads, conflicting demands) and high decision control (control and authority over work and possibility for growth and skill development) leads to favorable health outcomes. Thus, entrepreneurs, who are the embodiment of individuals working in active jobs, experience relatively high levels of health.

This research has two key policy-relevant findings. First, the fact that necessity entrepreneurship improves mental health—and does so independently of income changes—entails that active labor market policies, such as start-up subsidies for the unemployed, can not only promote labor market re-integration but also improve mental health.

Second, switching out of full-time private sector jobs into self-employment also brings health gains, at least in the short run. The self-employed have more flexibility to arrange their working days, which may better position them to engage in health-enhancing behaviors such as going to the gym.

Given that the mental health benefits of entrepreneurship exceed the physical ones, the positive consequences of self-employment appear to work through psychological mechanisms, which is a finding that deserves further exploration. While self-employment is not a silver bullet, these results show that in the short run, it can enhance social welfare by not only contributing to growth and innovation, but also to health.

International Women’s Day is this week, and millions around the world are mobilizing to celebrate womanhood and promote women’s rights. Unfortunately, there’s perhaps less to celebrate for women in the venture capital industry and the high-growth startups it supports. In 2017, just 16 percent of venture capital funding in the United States went to startups with at least one female founder, and only 2.5 percent went to companies with all female founders. [1] An estimated 9 percent of general partners (the people making investment decisions) at leading U.S. venture capital firms are women.

Compare those numbers to female representation in the workforce (47 percent), business ownership (36 percent), high-tech industry employment (30 percent), or as alumni of the relatively small number of feeder institutions (particular universities, degree programs, or corporations) that tend to dominate the sector (various percentages). [2] It quickly becomes clear that particular barriers exist for women in entrepreneurship in addition to those they already face in related fields. All is definitely not well.

The report analyzes patterns of venture-backed startup activity between 2005 and 2017 with a focus on the gender composition of founding teams. Instead of looking at topline aggregates of venture deals and funding, as others have done, I focused on the number of companies raising a first round of venture capital. I took this approach for two reasons. First, it allowed me to assess the flow of new companies entering the venture-backed pipeline each year—those closest to “starting up.” Second, by grouping startups into cohorts along a common dimension—in this case, companies raising a “first financing” during the same year—I was able to track performance over time in a meaningful way.

Figure 1 demonstrates the annual number of startups raising a first round of venture capital (bars), segmented by whether companies have at least one identifiable female founder or no female founders (bar colors). The line demonstrates the female-founded share of these companies overall. Startups with at least one identifiable female founder are considered “female-founded”; all others are “non-female-founded.”

Three insights emerge. First, the number of female-founded venture-backed startups has increased dramatically over time—from 1,036 in 2005 to a peak of 3,490 in 2014, before tailing off to 2,704 in 2017. Second, at 16 percent of first financings over the thirteen-year period, female-founded companies are underrepresented—particularly when compared to the other areas of the economy discussed earlier. Third, the female-founded share of startups is growing—from 7 percent in 2005 to 21 percent in 2017.

However, since this blog is primarily concerned with geography, the remainder of the post will focus on the distribution of female-founded startups across metropolitan areas. To simplify, I’ll look only at the top 50 cities in terms of first financings between 2005 and 2017. These cities accounted for 90 percent of startup activity over the period.

The maps here illustrate the number of first financings over the thirteen-year period (dot size) as well as the female-founded share (colors) of such financings. The cities with the highest portions of female-founded startups (darkest colors) among their ranks include Ann Arbor, Mich., Milwaukee, New York, Portland, Ore., and Las Vegas. The bottom of the rankings (lightest colors) includes Provo, Utah, Orlando, Fla., Minneapolis, Nashville, Tenn., and Atlanta.

Notably, the San Jose metropolitan area—which is most associated with Silicon Valley—is well below the national average (12 percent compared with 16 percent). It is the only metropolitan area among the five most active (the others being San Francisco, New York, Los Angeles, and Boston) that was not above-average compared to the nation.

Next, we’ll look at the data for just the latest two years—2016 and 2017. The rankings are shuffled up a bit, but the spread is also much wider. For example, 58 percent of Ann Arbor’s startups in the last two cohorts were female-founded, compared with 21 percent for the entire country. Likewise, Memphis, Tenn., Boulder, Colo., and Milwaukee were at or above 40 percent over those two years. Among the bottom here were San Antonio, Atlanta, Orlando, Bridgeport, Conn., and Salt Lake City.

So, what might explain some of the regional variation in the gender diversity of startup founders? There is surprisingly little research on the subject, but a working paper by Paul Gompers and Sophie Wang of Harvard suggests that “cultural and social” factors might play a role, such as religious affiliation, political leanings, and whether states had friendly policies for parental leave.

I found similar evidence with some exploratory analysis I conducted outside of the report. For example, I found a significant and positive correlation between a metro area’s share of venture-backed startups being founded by women and its vote share going to Hillary Clinton in the 2016 presidential election. This was true even among the top 50 or 100 metros (which are disproportionately Clinton-voting geographies) and after controlling for a number of factors that are highly correlated with venture-backed startup formation. [3]

Additionally, I found that metro areas experiencing the highest rates of growth in startup activity over the thirteen-year period also had, on average, a higher share of female-founded companies among them. This effect was strongest among the most active (largest) cities for startup activity. This may suggest that faster growing regions, large and small, are either less saddled by the legacy of male dominated venture capital and segments of the information technology sector, or that growth is increasingly being driven by cities that are more welcome to female founders.

Clearly, it is still early days for an established evidence-base in this area and warrants further research exploration.

Most of the fastest growing metropolitan areas are located on the coasts. What do they have in common? Almost always, the most successful cities excel at entrepreneurship.

As a group, such metro areas have found ways to foster job creation for their residents by amassing entrepreneurs and the early-stage financing that supports the process of company formation and scale-up.

Which is why the recent State of the Heartland Factbook, published by Brookings and the Walton Family Foundation, looks closely at Heartland states’ and metro areas’ current shares of employment at young firms (five years old or less) as a core indicator of economic vitality. The higher the share, the fact book asserts, the greater the potential for future economic growth.

The Factbook finds that overall, many places in the Heartland excel on young-firm growth, but more must be done to develop entrepreneurial awareness and the skills necessary to exploit opportunities.

Entrepreneurs are vital in a world with rapid technological change because they so often see the potential in newly developed intellectual properties and produce ideas for business models. Because entrepreneurs are not burdened by past personal and corporate insti­tutional biases, they can recognize and capitalize on new opportunities. In that sense, while today’s innovative stalwarts are at the technology production frontier, many firms will stagnate or disappear as technological change disrupts their business model. Places with entrepreneurs engaged in transforming research prowess into commercially viable technology-based products or services in the marketplace can stay ahead of those dynamics and keep generating new, good-paying jobs.

While today’s innovative stalwarts are at the technology production frontier, many firms will stagnate or disappear as technological change disrupts their business model.

The impact of entrepreneurship on economic growth, and on job creation in particular, is not immediate. Researchers focused on entrepreneurship have found that the most important growth effects of startup firms can take up to 10 years to occur. For that reason, regions need to continuously foster a supportive entrepreneurial community.

So how are Heartland places doing on entrepreneurship? Overall, only middling: Young firms in the 19 Heartland states represented just 9.0 percent of total employment in 2016, while non-Heartland states had an 11.6 percent share.

Between 2010 and 2016, Heartland states witnessed a decline of 65,000 jobs at young firms, while non-Heartland states experienced a gain of 220,000. Such trends explain much of the lower growth in total employment that Heartland states experienced in in recent years.

Young firms in the 19 Heartland states represented just 9.0 percent of total employment in 2016, while non-Heartland states had an 11.6 percent share.

North Dakota, driven in part by the Bakken Formation oil-exploration explosion, witnessed the fastest average annual growth in young-firm employment both in the Heartland and nationally between 2010 and 2016, at 4.2 percent. Nebraska was second in the Heartland and fifth-fastest nationally with 2.2 percent annual job growth at young firms 2 percent between 2010 and 2016. These states’ growth rates ranked very high nationally, but Heartland states like Louisiana, Arkansas, and Iowa actually lost jobs at young firms.

Turning to the region’s urban communities, the story also varies. Among larger metro areas in the Heartland, Milwaukee and Nashville, Tenn. experienced 3.1 percent average annual job growth at young firms over the 2010-2016 period. Close behind was Omaha, Neb. with average annual growth of 2.9 percent, all considerably higher than the 0.5 percent large-metro average for the region as a whole. Rounding out the bottom of the large metro rankings was Little Rock, Ark. (-2.2 percent); Grand Rapids, Mich. (-2.4 percent); and Toledo, Ohio (-3.1 percent).

Meanwhile, some smaller places are excelling in entrepreneurship. In a study that I co-authored earlier this year examining Micropolitan Success Stories in the Heartland, Findlay, Ohio; Brookings, S.D.; Oxford, Miss.; Jasper, Ind.; and Ardmore, Okla. all emerged as top performers. These micropolitan areas combine four factors for young-firm success: (1) entrepreneurial awareness with the capacity to execute accordingly; (2) an enlightened economic development philosophy that recognizes the vitality of entrepreneurs and small businesses to long-term vibrancy and dynamism; (3) public-private partnerships to provide support services for all levels of entrepreneurs; and (4) investors willing to place capital in startup firms with a good business plan. Beyond these, many of these communities boast the presence of successful female entrepreneurs. Brenda Stallings pioneered Matrix Telecommunication, a technology solutions firm, in Jasper, Ind. In 1979. Today, Matrix employs nearly 100 engineers, business professionals and solutions architects.

Ultimately, sustained job creation in the Heartland will depend largely on creating more opportunity for entrepreneurs. Time will tell whether leaders in the region heed the call to embrace young firms as the key to unlock future high-quality growth.

Small and medium-sized enterprises (SMEs) have the lowest rates of business survival worldwide, and it is generally difficult to grow employment in SMEs. Africa is no different. Viable businesses struggle with typical growth challenges around lack of access to capital and markets and the skills gap. Finding sustained solutions to these core private sector development challenges requires exploring territories beyond providing targeted support to SMEs, including building a more inclusive entrepreneurial ecosystem and embracing a more effective labor market and social protection policies.

Entrepreneurship needs to be nurtured, which should start with diagnosing the “scarcest resource” for enterprise development to maximize impact. Reliable funding is the lifeblood of any startup, yet in-depth knowledge of and experience in both domestic and international markets and managerial capability to run a firm of substantial size may well be far more important success factors than basic technical production knowledge. So how are the continent’s young populations and underrepresented groups supposed to acquire these much-needed entrepreneurial skills?

While SMEs may have helped lift millions out of poverty through employment, provided first time employment to youth, and improved the wellbeing of SME owners, they have failed to create the large-scale and high-quality jobs that Africa needs. At the core of the challenge to SME development in Africa lies failed labor market policies and skill investment strategies to match the skill needs of growing industries. If growth of small firms into medium- or large-scale enterprises is a measure of success, most of these targeted micro-interventions would best be viewed as extensions of livelihood support programs. Within these programs, Africa needs the right mix of private sector development and labor market and social protection policies with clarity on which objectives are being promoted to improve targeting.

Beyond smart policies, inclusivity must be actively pursued by a range of stakeholders. This priority should be reflected in governments’ procurement policies, budgeting, and engagement with social entrepreneurs and innovators, as well as in the private sector’s participation in inclusive business models to advance both economic and social returns to investment.

Notably, for communities of stakeholders who chose to support a segment of underrepresented populations such as women and youth, a focus on the entrepreneur helps to identify binding constraints, leverage key strengths, and direct effective support. It is worth noting that women bring different sets of skills to labor markets; face different challenges within and outside their enterprises; and thrive in settings where a web of institutions and range of stakeholders promoting inclusion, forming an essential component of women’s “empowerment capital,” safeguard and promote their interests and address their specific challenges. The crucial ability here lies in identifying which skills and resources a woman needs to thrive in her given empowerment capital, and in expanding and enriching the latter.

Emerging evidence from psychology and experimental economics has advanced our understanding of effective pathways to best support women-owned SMEs. Notably, for successful interventions to be transformative, they need to move beyond basic access to financial and human capital and address central psychological, social, and skills constraints that women entrepreneurs face. Interventions which saw more transformative effects for female entrepreneurs have expanded capital and skill-centric programs with the provision of softer skills; agency, leadership, and mind-set considerations; market-focused programs, such as training to identify new market opportunities; and gender-lens investing to accommodate women participants’ schedules and provided free or affordable child care.